Are Lobbyists Citizens?

On August 23, 2010, the Commissioner of Lobbying of Canada Karen Shepherd issued “clarifications” on when political activities by lobbyists create a conflict of interest. Unfortunately, these clarifications lack specifics and the Commissioner’s restrictions on political activities by lobbyists remain too broad. Indeed, they may bar some lobbyists from joining political parties.

Rule 8 and the November 2009 Guidance

Rule 8 forbids lobbyists from placing public office holders (such as federal Cabinet Ministers) in a conflict of interest. In November 2009, the Commissioner issued guidance that lobbyists’ “political activities” could place public office holders in a conflict of interest. However, she did not give any specifics on when “political activities” give rise to a conflict, and when they do not. This led to a chorus of outcries from the lobbying community and the bar. The Canadian Bar Association argued in June 2010 that the Commissioner’s failure to provide clear rules would discourage lobbyists from participating in the political process and breach their right to freedom of expression under the Charter.

The clarifications

In her clarifications, the Commissioner sets out the following principle:

the risk of creating the appearance of a conflict of interest is proportionate to the degree to which a lobbyist’s actions advance the private interest of a public office holder; and the degree to which that lobbyist may interact with the public office holder (or, in the case of a Minister or Minister of State, the department or agency for which they are responsible) as a consequence of their employment or undertaking.^[1]

The Commissioner then considers three levels of political activity engaged in by a lobbyist who “interacts closely” with a public office holder or the department or agency for which a Minister is responsible.

The first level is political activities that “advance the private interest of the public office holder to a low degree”. Activities at this level include voting or placing a sign on a law in an election, purchasing a ticket to a fundraising event, or donating money to an election campaign. These activities do not create an appearance of a conflict, and thus do not breach Rule 8, according to the Commissioner.

The second level is political activities that “advance the private interest of that public office holder to a higher degree”. These include “being a member of a public office holder's constituency association or limited participation in a campaign for the election of the public office holder”. Such activities carry a “greater risk or creating an appearance of a conflict”, and thus “increase the potential for a breach of Rule 8”, according to the Commissioner.

The third level is political activities that “advance the private interest of that public office holder to a high degree”. These include being a member of the board of directors of “a public office holder’s constituency association”, organizing fundraisers, or chairing an election campaign. These activities likely breach Rule 8, the Commissioner says.

Implications of the clarifications

Unfortunately, the Commissioner’s clarifications do little to clarify the issue of when “political activities” give rise to a conflict of interest or an appearance of a conflict of interest. The two main concepts that the Commissioner relies on, that is, the degree of interaction between the lobbyist and the public officer holder, or the department or agency for which a Minister is responsible, and the degree to which activities advance the public office holder’s private interest, lack specificity. The Commissioner’s clarifications deal with the case of a lobbyist who “interacts closely” with a public office holder, department or agency, but give no sense as to how she would distinguish a lobbyist who “interacts closely” from one who does not. It is not clear, for instance whether “degree of interaction” refers to the kind of interaction (telephone, email, meetings, etc), their frequency, the time spent, the degree to which substantive matters are discussed, or all of the above. 

This ambiguity will force lobbyists to assume that anything beyond minimal interaction with a public office holder or the department or agency for which a Minister is responsible constitutes “interacting closely”.

More troubling still, the Commissioner’s statement that “being a member of a public office holder's constituency association” is an activity that advances that public office holder’s private interests to a “higher degree” betrays a fundamental misunderstanding of how federal political parties are organized in Canada.

The phrase used by the Commissioner, “public office holders’ constituency association”, is itself inaccurate and misleading. Constituency associations are not organized or controlled by MPs, nor do they exist to advance the interests of the MP.

First of all, under the Canada Elections Act^[2] (CEA), and constitutions of the federal political parties,^[3] constituency associations, which are properly called “electoral district associations” (EDA), are branches of the federal party in a particular electoral district. To be registered, an EDA must be a part of a federal political party. Independent MPs cannot register an EDA.

A member of a federal party is automatically a member of the EDA for the electoral district in which he or she resides. Thus a lobbyist does not join an “office holders’ constituency association”; the lobbyist joins a federal political party and is automatically a member of the EDA for the electoral district in which he or she lives. The effect of the Commissioner’s clarification, therefore, is to prevent lobbyists from joining federal political parties if the riding they live in is represented by a Cabinet Minister. If the government’s proposal to designate all MPs as “public office holders” goes through, then lobbyists will be unable to join the political party to which their MP belongs. This is a serious and unwarranted restriction on the rights of lobbyists as Canadian citizens.

EDAs are also not controlled by MPs. They governed by a board of directors. While the MP or nominated candidate may be an ex officio member of the board, the MP or candidate does not have the right to direct the activities of the EDA.

EDAs do not directly advance the interests of MPs in either the electoral or financial sense. The CEA establishes strict rules for the financial administration of EDAs. While they can raise money to fight the next election (indeed, this is their main purpose!), they cannot transfer money to a candidate except during an election campaign. While EDAs often raise money by appealing to the public to support the MP, the money goes to, and is controlled by, the EDA. At the next election, it will be used for the campaign to elect the party’s nominated candidate, which may not be the sitting MP, since the MP may either resign or be forced out of the party. Neither MPs seeking re-election nor prospective candidates can raise money outside of the election campaign period–only the EDA can.

Similarly, party constitutions typically provide that the purpose of the EDA is to advance the interests of the party, including electing the party’s candidate during an election. EDAs are thus separate from the MP and have goals that are not necessarily the same as those of the MP. This can even lead to conflict between the EDA and the MP. Indeed, it is the members of the EDA who chose the candidate through the nomination process. Depending on the party constitution, the EDA members may also have the right to fire the MP by nominating a different candidate to run in the next election. As well, in extreme cases, where an MP crosses the floor or is expelled from caucus, the EDA will be forced to cut its ties with the MP and choose a new candidate. This happened most recently, for instance, to Helena Gurgis, who is no longer the conservative candidate in Simcoe-Grey.

It is thus risible to suggest that by joining a federal party and being assigned to the local EDA, a lobbyist advances the MPs private interests to a higher degree, or even at all. It is even possible for a lobbyist (or anyone else) to join a party, and thus the local EDA, for the purpose of opposing the sitting MP’s candidacy!

The above analysis also casts doubt on the Commissioner’s conclusion that a lobbyist who serves on the board of directors of an EDA advances the private interests of the MP to a high degree, and thus likely breaches of Rule 8. While board members undeniably have a closer relationship with the sitting MP than ordinary party members, the board does not directly advance any private interest of the MP, except during the election, when the board turns money over to the MP’s election campaign. A more nuanced analysis is required, in my view. A lobbyist who serves as a member of the board of his or her local EDA in a non-executive capacity should not be considered to place the MP in a conflict of interest. By contrast, if a lobbyist joins the executive of the board of an EDA for an electoral district that the lobbyist does not live in and has no ties with, but which just happens to be the electoral district represented by a Minister that the lobbyist is lobbying, is likely offside Rule 8.

Similarly, the Commissioner’s conclusion that a lobbyist who organizes a fundraiser for an EDA creates a conflict of interest is questionable. Money raised in a fundraiser goes to the EDA and is controlled by the EDA, not the sitting MP. That being said, after the election is called the money is transferred to the election campaign and is used to elect the party’s candidate, who is typically, but not always, the sitting MP. Once again, a more nuanced view is required. The degree of responsibility as an organizer undertaken by the lobbyist, whether the lobbyist is helping the EDA for his or her electoral district, or a different electoral district, and the proximity of the activity to an election, should be relevant.

While the Commissioner’s willingness to clarify her previous guidance on Rule 8 is commendable, her clarifications restrict lobbyists’ political activities too much and fail to respect the appropriate balance between the right of lobbyists, as citizens, to participate in the political process, and concerns that such participation could give rise to improper influence over that process.

Published in the The Hill Times, September 6, 2010.